This post is based mostly on an interview I’ve given to Outlook sometime early this year. I’ve long wanted to publish it on Startups.in but for the other things that keep me occupied.
In any case here we go.
Before we get to the interview, there is one thing that I’d like to mention.
There is no single recipe to forming a great “Startup”. Yes, you have heard(read) it right – there is no single recipe to forming a great “Startup”.
If we look around, we can come across cases where mega corps with big bucks and huge resources have failed, while a small team of two or perhaps three individuals with little or no resources to start with have took the same idea to mega success. To quote an example. Microsoft vs Google in how they executed the “Search” engine.
Way before Google came onto the scene, Microsoft (and even Yahoo, Excite and the likes) with their huge deep pockets could not revolutionize the search engine space while a relatively unknown team of two bright kids studying in Stanford and with absolutely no resources executed a simple idea so well, which ended up in the form of Google that we all know today.
The point again being, there is no “single” recipe to a successful startup. If there is one such, then we would all be seeing and hearing only to stories of successful startups and everyone would be quitting their jobs to startup.
As with any other food recipe, the secret is to experiment time and again until it works for you and the people around you love it.
So, “Startups” are only for those who can persist and have the courage and determination. It is not for people faint at heart.
Rewards and success are only a natural outcome but is not something that motivates true entrepreneurs. What drives an entrepreneur is the passion to innovate.
With that said, let’s begin the interview.
[OL] Please mention the steps which one needs to follow to have a business up and running, starting from the ideation stage. I would like to have an idea of each of the main steps and what it involves. Any tips/strategies?
] In general and at a minimum, one would of course need an idea. While ideas as they say are dime a dozen, what truly differentiates is the execution. Execution would require a proper planning and a great team.
So, forming a team would be the next step.
While a comprehensive business plan might not be a mandatory requirement at this stage, it is always good to have
a good understanding of your goals, vision and mission and of course, the economics associated with your business.
Naming, formalizing and legalizing the business (incorporation etc.) would be next logical step. Again, while it might or might not be a mandatory depending on the business you are in and the city where you conduct your business, it is something that would have to be done eventually. So, just get it done. Also, pay due diligence when branding a product/business or service. Proper branding always helps.
Next comes execution. This is where you set yourself apart from the rest of the crowd. I can’t stress enough on its importance. Also, be ready to change your strategy and business model, if you realize that things aren’t working as expected. Entrepreneurs should learn to be flexible, adaptive and willing to learn from mistakes.
Also, make sure you keep into consideration the requirement to scale your business in future right during the execution stage. There have been many startups which failed as they couldn’t scale.
Stage of growth: As your business grows, so would your funding needs. If you can sustain with the revenues being generated by your startup, then well and good. If not, be prepared to raise funding. Raising capital can be a herculean task, so plan accordingly.
Exit strategy: No, I don’t mean exit strategy for your startup but rather an exit strategy for you as “<fill in your role here>”. It could be exiting as a founder, CEO, CxO or what ever role you took on initially. Not many startup founders like the idea of giving up their title. But a true entrepreneur would know when the time is right to bring in a more seasoned professional to grow the company. No one entrepreneur can handle it all – sales, marketing, hiring and all the
other departments. So, be prepared to bring in a change.
2. What are the different funding options for startups? Do certain ideas lend them to certain funding options? For example do ideas in the Tech space lend themselves to investments from VCs? How does one find out what is the best funding option for his business?
Let’s take this one at a time.
First, the available options . This varies depending on the stage of startup. For seed funding, the usual option is to dip into the the savings or turn to the most obvious choice for many a entrepreneur and is what is usually termed as “FFF” option; meaning “Friends”, “Family” and “Fools” 🙂
Other option would be to go with small business loans provided by many banks and/or government agencies or approach Angel investors.
During growth stage where the requirement is usually on a higher scale, the startups can look at raising Venture Capital.
Each of these come with their associated risk/rewards. So, it is utmost important to explore and understand all the options really well.
Now onto the other part of your question. Ideas opening to funding avenue – do ideas in the Tech space lend
themselves to investments from VCs?
Well, not exactly. But what I would rather say is startups in a particular industry might interest a particular segment of investors. For example, startups in solar industry have a chance of evincing more interest when they approach investors with a past investment history in that sector.
( Related: Expert Advice on Why You Could Fail to Get Funded )
Finally, as to how does one find what is the best option? As a general rule of thumb, DO NOT raise OUTSIDE capital unless you absolutely must.
You can also consult with seasoned entrepreneurs or experienced people in the industry. You’d be surprised, but most people are willing to help only if you’d ask for it.
3. Can we say that some ideas work better during recession or does every idea work when properly implemented? What is it that one should keep in mind when starting a business during times such as these?
Yes and No.
Yes, because it is easier to find excellent resources for less during recession. So, recession could in fact be a good time to startup.
No, not every idea would work during recession even when “properly implemented”. You’d have to have an exceptional strategy and an equally outstanding implementation to turn dust into gold during times of recession.
4. What are the several ways a startup can look to reduce cost as far as initial and working capital is concerned? Please mention a few actionable areas.
If there are somethings better done and done for less when outsourced, then do not hesitate to do so.
Also, you don’t have to spend a fortune on marketing unless you build a product that people don’t like or understand and you are trying to push it onto them. If not, bank on viral marketing as much as possible.
5. Please describe the startup ecosystem in the country. What are the different resources that are available for a startup? Please give an idea of resources like startup consultants, barcamps, startup networks, incubators, blogs, forums etc, that one needs to be tuned into. How does one increase visibility/stay connected and whom does one turn to for the help and advice?
Unfortunately, in our country we still have a long way to go before claiming that the startup ecosystem in India is comparable to the one in other developed nations. With the exception of very few un-conferences and also some universities and colleges which have their own entrepreneurship cells, there aren’t (m)any that truly deserve a
mention. Most of the so called networks and incubators are out there exploiting people and taking them for a ride. Rest of them have their own agenda.
As in any other case, the people would have to mindful of what they are getting into. In this day and age, ones best friend is the Internet. Do your due diligence and spend sometime researching online to know the good and bad about each resource.
Needless to say, the best advice, connections, visibility are all possible on Internet.
6. How can one find out if one has it in him or her to start a business? What is it that he should ask himself to find out? Is there a checklist one can go through to find out? (which could explore both personal and financial traits of a person?)
This is a huge topic in itself but Robert Sullivan, the author of “Small Business Startup Guide” has a great checklist which is a must read.
Also, check out the following set of questions for entrepreneurs originally published on Forbes.
(If you are an Indian startup and would like to be interviewed or featured on Startups.in then we’d be happy to talk to you. Contact us right away.)